Labor Economics Reading List (Economics 750)

John Kennan

September 2016

If in doubt about what to read, read less, more carefully. But it is good to browse through many papers quickly early in the semester, to get an initial impression of where things fit in, and to get ideas for research papers.

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Labor Supply

Ben-Porath, Yoram, “The Production of Human Capital and the Life Cycle of Earnings,” The Journal of Political Economy, Vol. 75, No. 4, Part 1. (Aug., 1967), pp. 352-365. Browning, Martin, Angus Deaton and Margaret Irish: “A Profitable Approach to Labor Supply and Commodity Demands Over the Life-Cycle.” Econometrica, 53(3), May 1985, 503-543. Heckman, James J., “Shadow Prices, Market Wages, and Labor Supply,” Econometrica, Vol. 42, No. 4. (Jul., 1974), pp. 679-694. Heckman, James J., “Sample Selection Bias as a Specification Error,” Econometrica, Vol. 47, No. 1. (Jan., 1979), pp. 153-162. Imai and Keane (2004) Pencavel (1986) Blundell and Macurdy (1999)

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Retirement

Rust and Phelan (1997) French (2005) De Nardi, French, and Jones (2010) French and Jones (2011) Lockwood (2012) Laitner, Silverman, and Stolyarov (2014)

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Labor Demand

Hicks, J.R.: The Theory of Wages. London: Macmillan, 1932. Notes on Hicks. Kennan, John, “The Elusive Effects of Minimum Wages,” Journal of Economic Literature, December 1995. Sargent, Thomas J.: ”Estimation of Dynamic Labor Demand Schedules Under Rational Expectations,” in Lucas, Robert E. Jr., and Thomas J. Sargent, eds.: Rational Expectations and Econometric Practice, Minneapolis: The University of Minnesota Press, 1981.

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Equilibrium Wage and Employment Determination

Card, David, “The Causal Effect of Education on Earnings,” in Orley Ashenfelter and David Card, eds., Handbook of Labor Economics, Volume 3, North-Holland, 1999. Card and Lemieux (2001) Ekeland, Ivar, James J. Heckman and Lars Nesheim, “Identification and Estimation of Hedonic Models,” The Journal of Political Economy, Vol. 112, No. 1, Part 2. (Feb., 2004), pp. S60-S109. Eckstein, Keane, and Lifshitz (2016) Heckman, Lochner, and Taber (1998) 1

Johnson and Keane (2013) Jovanovic, Boyan, “Job Matching and the Theory of Turnover,” The Journal of Political Economy, Vol. 87, No. 5, Part 1. (Oct., 1979), pp. 972-990. Jovanovic, Boyan, “Firm-specific Capital and Turnover,” The Journal of Political Economy, Vol. 87, No. 6, (Dec., 1979), pp. 1246-1260. Juhn, Chinhui, Kevin M. Murphy and Brooks Pierce, ”Wage Inequality and the Rise in Returns to Skill,” Journal of Political Economy, 101 (3), June 1993, 410-442. Katz and Murphy (1992) Keane, Michael P. and Kenneth I. Wolpin, “The Career Decisions of Young Men,” The Journal of Political Economy, Vol. 105, No. 3, (Dec., 1997), pp. 473-522. Keane and Wolpin (2001) Neal, Derek and William R. Johnson, ” The Role of Premarket Factors in Black-White Wage Differences,” Journal of Political Economy, 104 (5), October 1996, 869-895. Rosen, Sherwin, “Hedonic Prices and Implicit Markets”, Journal of Political Economy 82 (1), January-February 1974, 34-55. Rosen, Sherwin: ”The Theory of Equalizing Differences,” Handbook of Labor Economics. New York: NorthHolland, 1986. Roy, A. D. “Some Thoughts on the Distribution of Earnings,” Oxford Economic Papers (New Series) 3, June 1951, 135-146. Smith, Adam. The Wealth of Nations. New York: The Modern Library 1937 (originally published 1776). Chapter X, Of Wages and Profit in the Different Employments of Labour and Stock , pages 99-143. Willis, Robert J. and Sherwin Rosen, ”Education and Self Selection ,” JPE 87, no. 5, pt. 2 (1979), S7-S36.

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Migration

Borjas, George J. (1999), “The Economic Analysis of Immigration,” in: Orley C. Ashenfelter and David Card, Editor(s), Handbook of Labor Economics, Elsevier, Volume 3, Part 2, pages 1697-1760. Card, David (2003), “The Impact of the Mariel Boatlift on the Miami Labor Market,” Industrial and Labor Relations Review, Vol. 43, No. 2 (Jan., 1990), pp. 245-257 Roback (1982) Blanchard and Katz (1992) Topel (1986) Topel and Ward (1992) Clemens, Montenegro, and Pritchett (2008) Clemens and Pritchett (2016) Gemici (2011) Kaplan and Schulhofer-Wohl (2013) Kennan and Walker (2011) Kennan (2015) Kennan (2013) Klein and Ventura (2007) Klein and Ventura (2009) Lessem (2015) Piyapromdee (2015) Borjas (2015)

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Trade and Wages

Trefler (1993) Helpman, Itskhoki, and Redding (2010) Bernard, Redding, and Schott (2013) Davis and Weinstein (2004)

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Goldberg and Pavcnik (2007) Dix-Carneiro (2014) Desmet, Nagy, and Rossi-Hansberg (2015) Bellon (2016)

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Wage Bargaining and Labor Contracts

Rosen, Sherwin, “The Economics of Superstars,” American Economic Review, Vol. 71, No. 5. (Dec., 1981), pp. 845-858. Lazear, Edward and Sherwin Rosen (1981), “Rank-Order Tournaments as Optimum Labor Contracts,” Journal of Political Economy, Vol. 89, No. 5, pp. 841-864. Harris, Milton and Bengt Holmstrom, “A Theory of Wage Dynamics,” Review of Economic Studies, Vol. 49, No. 3. (Jul., 1982), pp. 315-333. Prendergast, Canice, “The Provision of Incentives in Firms,” Journal of Economic Literature, March 1999, 37, 7-63. Stole, Lars and J. Zwiebel, ”Organizational Design and Technology Choice under Intrafirm Bargaining,” American Economic Review, 86(1), March 1996, 195-222. Stole, Lars and J. Zwiebel, “Intrafirm Bargaining and Non-Binding Employment Contracts,” Review of Economic Studies, 63, 1996, 375-410. Kennan, John and Robert Wilson, “Bargaining with Private Information,” Journal of Economic Literature, March 1993. Shapiro and Stiglitz (1984) Thomas and Worrall (1988)

References Bellon, M. (2016): “Trade liberalization and inequality: a dynamic model with firm and worker heterogeneity,” unpublished, Columbia University. Bernard, A. B., S. J. Redding, and P. K. Schott (2013): “Testing for Factor Price Equality with Unobserved Differences in Factor Quality or Productivity,” American Economic Journal: Microeconomics, 5(2), 135–163. Blanchard, O. J., and L. F. Katz (1992): “Regional Evolutions,” Brookings Papers on Economic Activity, 1, 1–37. Blundell, R., and T. Macurdy (1999): “Chapter 27 Labor supply: A review of alternative approaches,” vol. 3, Part 1 of Handbook of Labor Economics, pp. 1559 – 1695. Elsevier. Borjas, G. J. (2015): “Immigration and Globalization: A Review Essay,” Journal of Economic Literature, 53(4), 961–74. Card, D., and T. Lemieux (2001): “Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis,” The Quarterly Journal of Economics, 116(4), 705–746. Clemens, M., C. Montenegro, and L. Pritchett (2008): “The Place Premium: Wage Differences For Identical Workers Across The US Border,” World Bank Policy Research Working Paper No. 4671. Clemens, M. A., and L. Pritchett (2016): “The New Economic Case for Migration Restrictions: An Assessment,” IZA Discussion Paper 9730. Davis, D. R., and D. E. Weinstein (2004): “The Factor Content of Trade,” in Handbook of International Trade, ed. by E. K. Choi, and J. Harrigan. Wiley-Blackwell. De Nardi, M., E. French, and J. B. Jones (2010): “Why Do the Elderly Save? The Role of Medical Expenses,” Journal of Political Economy, 118(1), pp. 39–75.

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Desmet, K., D. K. Nagy, and E. Rossi-Hansberg (2015): “The geography of development: evaluating migration restrictions and coastal flooding,” Discussion paper, National Bureau of Economic Research. Dix-Carneiro, R. (2014): “Trade liberalization and labor market dynamics,” Econometrica, 82(3), 825–885. Eckstein, Z., M. Keane, and O. Lifshitz (2016): “Sources of Change in the Life-Cycle Decisions of American Men and Women: 1962-2014,” . French, E. (2005): “The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour,” Review of Economic Studies, 72(2), 395–427. French, E., and J. B. Jones (2011): “The Effects of Health Insurance and Self-Insurance on Retirement Behavior,” Econometrica, 79(3), 693–732. Gemici, A. (2011): “Family Migration and Labor Market Outcomes,” Discussion paper, New York University, Department of Economics. Goldberg, P. K., and N. Pavcnik (2007): “Distributional Effects of Globalization in Developing Countries,” Journal of Economic Literature, 45(1), 39–82. Heckman, J. J., L. Lochner, and C. Taber (1998): “Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents,” Review of Economic Dynamics, 1, 1–58. Helpman, E., O. Itskhoki, and S. Redding (2010): “Inequality and unemployment in a global economy,” Econometrica, 78, 1239–1283. Imai, S., and M. P. Keane (2004): “Intertemporal Labor Supply and Human Capital Accumulation,” International Economics Review, 45(2), 601–641. Johnson, M., and M. P. Keane (2013): “A Dynamic Equilibrium Model of the US Wage Structure, 1968-1996,” Journal of Labor Economics, 31, 1–49. Kaplan, G., and S. Schulhofer-Wohl (2013): “Understanding the long-run decline in interstate migration,” Discussion paper, Federal Reserve Bank of Minneapolis, Working paper 697. Katz, L. F., and K. M. Murphy (1992): “Changes in Relative Wages, 1963-1987: Supply and Demand Factors,” Quarterly Journal of Economics, 107, 35–78. Keane, M. P., and K. I. Wolpin (2001): “The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment,” International Economic Review, 42(4), 1051–1103. Kennan, J. (2013): “Open Borders,” Review of Economic Dynamics, 16, L1–L13. (2015): “Spatial Variation in Higher Education Financing and the Supply of College Graduates,” Working Paper 21065, National Bureau of Economic Research. Kennan, J., and J. R. Walker (2011): “The Effect Of Expected Income On Individual Migration Decisions,” Econometrica, 79(1), 211–251. Klein, P., and G. Ventura (2007): “TFP Differences and the Aggregate Effects of Labor Mobility in the Long Run,” The B.E. Journal of Macroeconomics, 7(1), 1–36. (2009): “Productivity differences and the dynamic effects of labor movements,” Journal of Monetary Economics, 56(8), 1059 – 1073. Laitner, J., D. Silverman, and D. Stolyarov (2014): “Annuitized Wealth and Post-Retirement Saving,” Working Paper 20547, National Bureau of Economic Research. Lessem, R. (2015): “Mexico-U.S. Immigration: Effects Of Wages And Border Enforcement,” Carnegie-Mellon University. 4

Lockwood, L. M. (2012): “Incidental Bequests: Bequest Motives and the Choice to Self-Insure Late-Life Risks,” http://www.ssc.wisc.edu/ jkennan/teaching/LockwoodBSI.pdf. Pencavel, J. (1986): “Labor Supply Of Men: A Survey,” vol. 1 of Handbook of Labor Economics, pp. 3–102. Elsevier. Piyapromdee, S. (2015): “The Impact of Immigration on Wages, Internal Migration and Welfare,” Discussion paper, UCL. Roback, J. (1982): “Wages, rents, and the quality of life,” The Journal of Political Economy, pp. 1257–1278. Rust, J., and C. Phelan (1997): “How Social Security and Medicare Affect Retirement Behavior In a World of Incomplete Markets,” Econometrica, 65(4), pp. 781–831. Shapiro, C., and J. E. Stiglitz (1984): “Equilibrium Unemployment as a Worker Discipline Device,” The American Economic Review, 74(3), 433–444. Thomas, J., and T. Worrall (1988): “Self-Enforcing Wage Contracts,” The Review of Economic Studies, 55(4), 541–554. Topel, R., and M. Ward (1992): “Job Mobility and the Careers of Young Men,” The Quarterly Journal of Economics, 107(2), 439–479. Topel, R. H. (1986): “Local Labor Markets,” Journal of Political Economy, 94(3 part 2), S111–S143. Trefler, D. (1993): “International Factor Price Differences: Leontief was Right!,” The Journal of Political Economy, 101(6), pp. 961–987.

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